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REAL ESTATE ADVISORY COMMIT TEE
ANNUAL REPORT2017

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1 | 2017 ANNUAL REPORT
REAL ESTATE ADVISORY COMMITTEE
RON MADRID
CATHERINE DAULER
PEG HAMBRICK
RICH KALIN
JESSE WEBER
REDEVELOPMENT AUTHORITY
SALLY LENKER
COLLEEN RITTER
JAMES SHINCOVICH
DON HAHN
BECKY MISANGYI
JANUARY 2018 DRAFT

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Contents
Definitions
Executive Summary
Implemented Recommendations
Real Estate Advisory Committee
Motions for Recommendations
Overall Community Development
Program Costs
Inventory
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5
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3 | 2017 ANNUAL REPORT

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NEIGHBORHOOD SUSTAINABILITY PROGRAM| 4
DEFINITIONS
In order to read this report, a list of specialized terms with their
definitions are provided below to avoid any misunderstanding.
Operating Costs
Property expenses during the period of RDA ownership, between
purchase and sale, i.e. cleaning, utilities, insurance, maintenance and
repairs, and lawn care.
Contracted Services
Third-party professional services, i.e. legal.
Homestead Investment Program (HIP)
The original and former name of this initiative. The Real Estate Advisory
Committee (REAC) recommended to Borough Council in 2016 to
change the name to Neighborhood Sustainability Program.
House
A building for human habitation, especially one that is lived in by
a family.
Indirect Costs
Overhead costs from various borough departments, allocated once
per year, for support rendered to the program: general administration,
human resources, purchasing and risk management, information
technology, finance, building depreciation and utilities.
Loan Origination
Fees associated with the process by which a borrower applies for
a loan.
Neighborhood Sustainability Program (NSP)
The current name of this program, established to acquire houses
and encourage diversity in our neighborhoods by reducing the
concentration of student housing.
Price Write-Down
Difference between the purchase and sale prices of a house.
Program Costs
All costs to acquire, operate and sell a house.
Real Estate Advisory Committee (REAC)
The committee created by Borough Council to evaluate the operation
of the NSP and give recommendations for revisions.
Redevelopment Authority (RDA)
The public administrative unit with responsibility for the renovation of
urban areas designated in need of redevelopment. The RDA is the
Authority in charge of the NSP.
Staff Administration
Administrative time from Planning Staff and the RDA Chair. The Chair’s
services and experience as a licensed Realtor has been invaluable to
this program.
Transactional Costs
All closing costs for the purchase and sale of a house.
Unit
A residence, such as an apartment within a larger structure, that
provides single household space for occupants.

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EXECUTIVE SUMMARY
The Neighborhood Sustainability Program began in April 2014
with the establishment of a three year, five-million-dollar line of
credit to be used to acquire homes to encourage diversity in our
neighborhoods by reducing the concentration of student housing.
At the time of establishment, Borough Council also created a
Real Estate Advisory Committee to evaluate the operation of the
program and give recommendations for revisions. The REAC is to
submit a report within sixty days of the beginning of the calendar
year.
The stated goals of the Neighborhood Sustainability Program
include two key provisions from Borough Council’s 2009
Strategic Plan:
Support Borough Council’s goal of
maintaining safe, stable and attractive
neighborhoods through the expansion of
housing initiatives by encouraging and
fostering home ownership.
Support Borough Council’s goal of
developing additional housing, especially
workforce housing, by expanding the
supply of workforce housing either through
expanding affordable home ownership
programs or through increasing the supply
of affordable rental housing for households
where one or more of the members of the
household are employed.
“
“

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REAL ESTATE ADVISORY
COMMITTEE (REAC)
The Real Estate Advisory Committee was formed to provide
a mechanism for evaluating the Redevelopment Authority’s
administration of the program.
REAC RESPONSIBILITY/CHARGE:
…shall advise the State College Borough
Council on the implementation of the
Homestead Investment Program (HIP)
and provide Borough Council with any
recommendations for modifications that
improve the effectiveness in meeting stated
program goals…
“
“

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IMPLEMENTED RECOMMENDATIONS
The REAC met in November 2016 and January 2017 to review the program costs,
challenges and possible program improvements. The committee held extensive discussions
and recommended the following items to be implemented in order to maximize impact and
minimize cost of the Neighborhood Sustainability Program.
Borough Council received the recommendations from REAC and directed RDA to implement
these changes to the program for 2017.
• Properly staff the program for administration
• Change the name from the Homestead Investment Program to the Neighborhood
Sustainability Program
• Deed restriction will allow owners to rent the property to non-students
• Focus the program on reducing the number of Student Homes in the R-1, R-2 and R-3
zoning districts through property acquisition or through the new grant program to
acquire and extinguish Student Home permits
• Prevent new Student Homes from materializing within the R-1, R-2 & R-3 zoning districts
Throughout the year, the RDA fine-tuned other operational aspects of the Neighborhood
Sustainability Program in order for this program to be successful. The RDA had to adapt to
the aggressive real estate market of the Borough.
• Rehab cap was increased to $25,000
• Eliminated the $400,000 cap for purchasing a house
• Removed the home inspection contingency as long as we have a home inspector
present when viewing the house
• Decreased the Realtor commission to 2% for ‘For Sale By Owner’ (FSBO) purchases

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NEIGHBORHOOD SUSTAINABILITY PROGRAM
The recommendations previously mentioned were enacted throughout 2017. The
Homestead Investment Program is now referred to as the Neighborhood Sustainability
Program (NSP). Staffing was acquired towards the end of 2017 and staff is currently
working on creating a grant program that will focus on acquiring and extinguishing
Student Home permits for 2018.
With this report being the final evaluation of the work performed for 2017, the REAC
evaluated the total program costs for 2017 and all previous years of operation. The
Redevelopment Authority has purchased a total of eight properties (11 units). To date, five
properties have sold with the other three properties in use as rentals. Their rental lease will
end in Summer of 2018. The RDA will list those houses for the Spring 2018 selling season.
Since each property purchased had a restriction placed on the deed to prevent any future
student rental use of the property, a price reduction will likely occur as the houses are put
on the market. On average, for the five properties sold, the drop in price was roughly
$20,000.00 per house. Staff is expecting a decrease in costs for the program since the
deed is only restricting rental to students and the 6 units the program currently holds is
generating revenue from the tenants.
REAL ESTATE ADVISORY COMMITTEE 2017
MOTIONS FOR RECOMMENDATIONS
REAC met in October 2017 to review the program costs, challenges and possible program
improvements. The committee held extensive discussions and recommended the following
items to be implemented in 2018 in order to maximize impact and minimize cost.
• Implement the new grant program to acquire and extinguish Student Home permits
• Prospect current Student Home Property Owners
• Develop a community awareness campaign to increase awareness of Borough
Housing Programs
• Connect with area employers regarding current inventory
• Recommend RDA develop a decision-making protocol for determining when a
property being marketed for sale should be converted to a rental for the following
year

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9 | 2017 ANNUAL REPORT
PROGRAM ADMINISTRATION COSTS
2014 - 2017
YEARS 2014 - 2017
STAFF ADMINISTRATION COSTS $90,254.69
APPRAISALS $800.00
LOAN INTEREST $ 46,227.98
LOAN ORIGINATION $67,687.03
INDIRECT COSTS $14,117.00
TOTAL $219,086.70
REAL ESTATE COSTS
2014 - 2017
YEARS 2014 - 2017
PRICE WRITE-DOWN (DIFFERENCE) 5 SOLD HOUSES $98,705.00
CLOSING COSTS $76,435.19
REALTOR COMMISSION $121,300.00
OPERATIONAL COSTS $55,807.58
TOTAL $352,247.77
*COST OF UNSOLD INVENTORY $1,675,000.00
TOTAL *cost of unsold inventory included $2,027,247.77
70K PER HOUSE (cost of unsold inventory not included)
114K PER HOUSE (administration costs and real estate costs included; not unsold inventory)
OVERALL COMMUNITY DEVELOPMENT
PROGRAM COSTS
*Cost of unsold inventory is the three (3) duplexes that the RDA currently owns and is seen as an investment;
not a cost against the houses already sold.

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PROJECTED PROGRAM COSTS
2018
YEAR 2018
ACQUISITION COSTS (10 UNITS) $2,700,000.00
PRICE WRITE-DOWN X 7 UNITS $378,000.00
5.5% SALES COMMISSIONS X 7 UNITS $83,160.00
INTEREST ON LINE-OF-CREDIT $84,890.00
REHAB COST ESTIMATE ($25,000/UNIT) $175,000.00
STAFF ADMINISTRATION $106,945.00
TOTAL (118K PER UNIT) $827,995.00
2018 PROJECTED COMMUNITY DEVELOPMENT
PROGRAM COSTS
The Redevelopment Authority approved a 2018 budget for the Neighborhood Sustainability
Program. The Redevelopment Authority projected a purchase of ten units (30 beds) and
the sale of seven units (21 beds) as part of the approved 2018 budget.

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11 | 2017 ANNUAL REPORT
HIP001
720 S ALLEN ST.

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OPERATIONAL COSTS (13 MOS.)
YEAR 2015 2016
UTILITIES AND INSURANCE $ 1,056.99 $626.55
PUBLIC WORKS STAFF AND MAINTENANCE $ 3,843.61 $ 1,599.94
TAXES AND ASSESSMENT — $3,502.50
OTHER CONTRACTED SERVICES — $84.00
$4,900.60 $5,812.99
TOTAL $10,713.59
TOTAL COSTS
PROGRAM COSTS $44,129.85
OPERATIONAL COSTS (13 MOS.) $10,713.59
TOTAL $54,843.44
PROGRAM COSTS
PURCHASE SALE
PRICE $239,000.00 $226,795.00
PRICE WRITE-DOWN (DIFFERENCE) $12,205.00
CLOSING COSTS $6,331.40 $1,266.45
BUYER ASSISTANCE — $6,705.00
REALTOR COMMISSION $4,780.00 $12,842.00
$11,111.40 $33,018.45
TOTAL $44,129.85
HIP001—720 S ALLEN ST.
This house was bought by the Borough in March of 2015 for $239,000.00 and was sold in April of
2016 for $226,795.00. The Borough carried this house for thirteen months, which put the Borough’s total
operating costs at $10,713.59. This house was a registered Student Home and was located on a block
with a rental percentage of 71%. Since this house was sold, the Student Home Permit was extinguished
and it sits on a block with a rental percentage of 65%. This was sold to a family of four and the Borough
renovated the front porch.

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HIP002
222 W PROSPECT AVE.

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OPERATIONAL COSTS (11 MOS.)
YEAR 2015 2016
UTILITIES AND INSURANCE $1,277.03 $716.71
PUBLIC WORKS STAFF AND MAINTENANCE $378.44 $154.00
TAXES AND ASSESSMENT — $2,903.26
OTHER CONTRACTED SERVICES — $325.50
$1,655.47 $4,099.47
TOTAL $5,754.94
TOTAL COSTS
PROGRAM COSTS $5,754.94
OPERATIONAL COSTS $78,233.03
TOTAL $83,987.97
PROGRAM COSTS
PURCHASE SALE
PRICE $271,000.00 $218,000.00
PRICE WRITE-DOWN (DIFFERENCE) $53,000.00
CLOSING COSTS $6,303.63 $609.40
BUYER ASSISTANCE — $6,000.00
REALTOR COMMISSION — $12,320.00
$6,303.63 $71,929.40
TOTAL $78,233.03
HIP002—222 W PROSPECT AVE.
This house was bought by the Borough in June of 2015 for $271,000.00 and was sold in July of 2016 for
$218,000.00. The Borough carried this house for thirteen months, which put the Borough’s total operating
costs at $5,754.94. This house was located on a block with a rental percentage of 47%. Since this house
wasn’t operating as a rental property, the rental percentage for the block will remain at 47%.

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15 | 2017 ANNUAL REPORT
HIP003
304 W PROSPECT AVE.

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OPERATIONAL COSTS (10 MOS.)
YEAR 2015 2016
UTILITIES AND INSURANCE $734.90 $572.23
PUBLIC WORKS STAFF AND MAINTENANCE — $2,489.73
TAXES AND ASSESSMENT — $3,480.00
$734.90 $6,541.96
TOTAL $7,276.86
TOTAL COSTS
PROGRAM COSTS $47,576.67
OPERATIONAL COSTS $7,276.67
TOTAL $54,853.53
PROGRAM COSTS
PURCHASE SALE
PRICE $241,500.00 $232,000.00
PRICE WRITE-DOWN (DIFFERENCE) $9,500.00
CLOSING COSTS $5,101.67 $12,970.00
BUYER ASSISTANCE — —
REALTOR COMMISSION $7,245.00 $12,760.00
$12,346.67 $35,230.00
TOTAL $47,576.67
HIP003—304 W PROSPECT AVE.
This house was bought by the Borough in July of 2015 for $241,500.00 and was sold in May of 2016 for
$232,000.00. The Borough carried this house for ten months, which put the Borough’s total operational
costs at $7,276.86. This house was located on the same block as HIP 002, and has a rental percentage
of 47%. Similarly to HIP 002, this house wasn’t operating as a rental property, therefore the rental
percentage for the block will remain at 47%.

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HIP004
461 E FOSTER AVE.

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OPERATIONAL COSTS (16 MOS.)
YEAR 2016 2017
UTILITIES AND INSURANCE $471.93 $1,605.28
PUBLIC WORKS STAFF AND MAINTENANCE $2,378.94 $13,435.12
TAXES AND ASSESSMENT — $5,239.83
OTHER CONTRACTED SERVICES — $263.86
$2,850.87 $20,544.09
TOTAL $23,394.96
TOTAL COSTS
PROGRAM COSTS $41,158.19
OPERATIONAL COSTS $23,394.96
TOTAL $64,553.15
PROGRAM COSTS
PURCHASE SALE
PRICE $299,500.00 $279,000.00
PRICE WRITE-DOWN (DIFFERENCE) $20,500.00
CLOSING COSTS $5,418.19 —
BUYER ASSISTANCE $1,500.00 —
REALTOR COMMISSION — $16,740.00
$3,918.19 $37,240.00
TOTAL $41,158.19
HIP004—461 E FOSTER AVE.
This house was bought by the Borough in July of 2016 for $299,500.00 and sold November of 2017
for $279,000.00. The Borough carried this house for sixteen months, which puts the operating costs at
$23,394.96. This house was located on a block with a rental percentage of 46%. This house was being
used as a rental, and now it’s located on a block with a rental percentage of 40%.

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19 | 2017 ANNUAL REPORT
NSP005
706 N ALLEN ST.

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OPERATIONAL COSTS (2 MOS.)
YEAR 2017
UTILITIES AND INSURANCE $564.60
PUBLIC WORKS STAFF AND MAINTENANCE $272.80
TAXES AND ASSESSMENT $4,881.37
OTHER CONTRACTED SERVICES $149.37
TOTAL $5,868.14
TOTAL COSTS
PROGRAM COSTS $16,480.10
OPERATIONAL COSTS $5,868.14
TOTAL $22,348.24
PROGRAM COSTS
PURCHASE SALE
PRICE $327,500.00 $324,000.00
PRICE WRITE-DOWN (DIFFERENCE) $3,500.00
CLOSING COSTS $8,017.60 —
BUYER ASSISTANCE $3,500.00 —
REALTOR COMMISSION $1,912.50 $6,550.00
$6,430.10 $10,050.00
TOTAL $16,480.10
NSP005—706 N ALLEN ST.
This house was bought by the Borough in June of 2017 for $327,500.00 and sold August of 2017
for $324,000.00. The Borough carried this house for two months, which puts the operating costs at
$5,868.14. This house was located on a block with a rental percentage of 40%. This house had three
(related) students living in it, and now that it sold, the block will remain with a rental percentage of 40%.

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21 | 2017 ANNUAL REPORT
NSP006
306 S GILL ST

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OPERATIONAL COSTS (5 MOS.)
YEAR 2017
INSURANCE $150.00
PERMITS AND FEES $153.00
PUBLIC WORKS STAFF AND MAINTENANCE $65.00
TOTAL $368.00
TOTAL COSTS
PROGRAM COSTS $614,162.18
OPERATIONAL COSTS $368.00
REVENUE $13,250.00
TOTAL $601,280.18
REVENUE
RENT $13,250.00
TOTAL $13,250.00
PROGRAM COSTS
PURCHASE SALE
PRICE $590,000.00 —
PRICE WRITE-DOWN (DIFFERENCE) —
CLOSING COSTS $12,362.18 —
BUYER ASSISTANCE — —
REALTOR COMMISSION $11,800.00 —
$614,162.18 —
TOTAL $614,162.18
NSP006—306 S GILL ST
This house was bought by the Borough in July of 2017 for $590,000.00. This is the first duplex (2 units)
bought by the RDA and is a registered Student Home. The lease will expire in July of 2018, and the RDA
will be listing the house for sale in Spring of 2018. Operational costs for this house as of December 2017
is $368.00 and revenue collected on this house is $13,250.00. This house is located on a block with a
rental percentage of 20%. This house has a Student Home License registered to it, and once it sells, it will
be located on a block with a rental percentage of 10%.

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NSP007
230-234 W LOGAN AVE

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NEIGHBORHOOD SUSTAINABILITY PROGRAM| 24
OPERATIONAL COSTS (4 MOS.)
YEAR 2017
INSURANCE $482.00
PERMITS AND FEES $35.00
TOTAL $517.00
TOTAL COSTS
PROGRAM COSTS $541,781.03
OPERATIONAL COSTS $517.00
REVENUE $15,395.00
TOTAL $526,903.03
REVENUE
RENT $15,395.00
TOTAL $15,395.00
PROGRAM COSTS
PURCHASE SALE
PRICE $515,000.00 —
PRICE WRITE-DOWN (DIFFERENCE) —
CLOSING COSTS $11,331.03 —
BUYER ASSISTANCE — —
REALTOR COMMISSION $15,450.00 —
$541,781.03 —
TOTAL $541,781.03
NSP007—230-234 W LOGAN AVE.
This house was bought by the Borough in August of 2017 for $515,000.00. This is the second duplex (2
units) bought by the RDA and has a Student Home License on one side. The lease will expire in August of
2018, and the RDA will be listing the house for sale in Spring of 2018. Operational costs for this house as
of December 2017 is $517.00 and revenue collected on this house is $15,395.00. This house is located
on a block with a rental percentage of 47%. This house has one Student Home License registered to it,
and once it sells, it will be located on a block with a rental percentage of 41%.

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25 | 2017 ANNUAL REPORT
NSP008
245 E HAMILTON AVE

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NEIGHBORHOOD SUSTAINABILITY PROGRAM| 26
OPERATIONAL COSTS (2 MOS.)
YEAR 2017
UTILITIES AND INSURANCE $1,261.51
PERMITS AND FEES $153.00
PUBLIC WORKS STAFF AND MAINTENANCE $499.58
TOTAL $1,914.09
TOTAL COSTS
PROGRAM COSTS $592,728.38
OPERATIONAL COSTS $1,914.09
REVENUE $7,000.00
TOTAL $587,642.47
REVENUE
RENT $7,000.00
TOTAL $7,000.00
PROGRAM COSTS
PURCHASE SALE
PRICE $570,000.00 —
PRICE WRITE-DOWN (DIFFERENCE) —
CLOSING COSTS $11,328.38 —
BUYER ASSISTANCE — —
REALTOR COMMISSION $11,400.00 —
$592,728.38 —
TOTAL $592,728.38
NSP008—245 E HAMILTON AVE.
This house was bought by the Borough in October of 2017 for $570,000.00. This is the third duplex (2
units) bought by the RDA and has a Student Home License on one side. The lease will expire in July of
2018, and the RDA will be listing the house for sale in Spring of 2018. Operational costs for this house as
of December 2017 is $1,914.09 and revenue collected on this house is $7,000.00. This house is located
on a block with a rental percentage of 25%. This house has a Student Home License registered to it, and
once it sells, it will be located on a block with a rental percentage of 18%.

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